On March 22 in Tokyo, UN-Water will release its World Water Development Report in conjunction with its annual World Water Day 2014 celebrations. This annual event is meant to raise awareness for water – indispensable for human life on earth. This year’s theme is “Water & Energy”. Despite its apparent importance, the issue of water rarely receives the public attention it deserves, at least in developed countries where water is readily available. This initial lack of coverage tends to transition quickly to extensive coverage when there is either too much water (flooding) or too little water (drought) available.

Nevertheless, water is gaining in importance, highlighted by the increased focus on the issue of water in various meaningful reports. The 2013 OECD’s report “Water Security for Better Lives” identifies water security as a major policy challenge, stating that 40% of the world’s population will face severe water stress conditions – increasing water demand, water pollution, and water stress – by 2050 and calling on national governments to speed up water management efforts.

It is important to note that stress is relative to the amount of water available in a certain area. The 2030 Water Resources Group report “Charting Our Water Future” estimates that by 2030 the world’s demand for water will be 40% higher than it is today, and more than 50% higher in the most rapidly developing countries. Historic rates of supply expansion and efficiency improvement will only be able to close a fraction of the gap that will likely have widened by that time. The World Economic Forum ranked water crises third among the ten global risks of the highest concern in its 2014 Global Risk report. Finally, the International Energy Agency (IEA) conducted an in-depth analysis of the water-energy nexus identifying ways to use water in energy production and consumption more efficiently and effectively in the chapter titled “Water for Energy: Is energy becoming a thirstier resource” of its World Energy Outlook 2012. Maria van der Hoeven, IEA Executive Director, puts this in a nutshell: “Water availability is a growing concern for energy and assessing the energy sector’s use of water is important in an increasingly water-constrained world.”

Ms. van der Hoeven stresses that water and energy are inextricably linked and mutually dependent, with each affecting the other’s availability, meaning that changes in water availability may significantly impact energy supply. South Africa serves as a cautionary tale. This water stressed country tries to tackle water scarcity and persistent electricity crises simultaneously by allocating about 2% of its water supply to coal mining and another 2.5% to Eskom, the South African electricity public utility. Eskom is designated “strategic water user” of national importance, according to Shanaaz Nel of Greenpeace Africa. Nearly 98% of South Africa’s water resources have already been allocated, leaving “no resilience in the system to respond to extreme weather events, natural disasters or increased energy demands”, explains Shanaaz Nel.

Many aspects of energy production require the use of water to operate as the next chart shows.

Water Use by the U.S. Energy Sector

In the EU, energy production – predominantly cooling water – is the greatest source of consumption (44%). In 2010, global water withdrawals for energy use – currently accounting for about 15% of total global water use – came in at an estimated 583 billion cubic meters (bcm), with 66bcm of water (~11%) withdrawn but not returned to its original source, according to the IEA.

It is crucial to understand the two main ways power generation uses water. In the first case of ‘water consumption’, water is permanently taken from a source to be either evaporated (for cooling) or transported to another location for use. In the second case of ‘water withdrawal’, water is temporarily withdrawn from the ground, or a surface source like a river or lake, diverted and then returned to its origin (hydropower). Renewables such as wind or solar PV have the lowest operational and life-cycle water consumption in terms of water use per unit of electricity generated. Interestingly, concentrating solar power (CSP) technology – unlike solar PV cells – requires considerable volumes of water for cooling purposes.

Global Water Use for Energy Production by Fuel Type

According to research by the Congressional Research Service, the energy sector is the fastest growing water consumer in the US with projected 85% of domestic water consumption growth between 2005 and 2030. This increase in water use is being driven, at least in part, by shifts to more water-intensive energy sources (shale oil and gas) and technologies. The energy sector’s surging demand for water will inevitably compete with rising demand from the agricultural and industrial sectors. Energy infrastructure is highly susceptible to climate change impacts, which could compound the situation, a conclusion drawn by a report by the Government Accountability Office (GAO) released in January 2014.

So what would make a sensible, environmentally responsible and sustainable water management policy? Foremost, policymakers need to take water efficiency into account when designing energy and climate frameworks because climate change can reduce freshwater supplies and lead to uneven “redistribution” of remaining water resources. This in conjunction with pressures from population growth and changing nutritional preferences adds to the challenge. Additionally, a multi-disciplinary approach that recognizes sectoral water use can be highly inter-related is advisable. Diverting water to agriculture could short supplies for local power generation, for example. Effectively dealing with water scarcity requires a an integrated cross-border strategy with systemic solutions to local challenges that remains mindful of the water-energy nexus.

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Roman Kilisek is a Global Energy & Natural Resources Analyst and a contributor at Breaking Energy. His writing and research focuses on global energy policy, energy infrastructure and trade, commodities, mining, global political risk and macroeconomics. He likes to draw on scenario development and analysis. He has a Master of Arts degree in international relations and diplomacy from Seton Hall ...